Foreign Ownership of Apartment in Indonesia

Foreign ownership over property is very restricted, if not prohibited, under the current laws and regulations in Indonesia. Based on Law Number 5 Year 1960 regarding Fundamental Provisions of Agrarian Principles (“Agrarian Law”) foreign individuals are prohibited to own a land in Indonesia with ownership (Hak Milik) title. They can only be granted with Right to Use (“Hak Pakai”) title, which is a right to use of and/or extract products from land possessed directly by the state or land owned by another party.

Pursuant to Government Regulation Number 40 Year 1996 regarding Right of Cultivate, Right to Build and Right to Use of Land, Hak Pakai title is granted for 25 years maximum and may be extended for 20 years maximum. In the event Hak Pakai title expires or ceases to exist, the object of Hak Pakai must be returned to the grantor.

Under Government Regulation Number 41 Year 1996 regarding Ownership of Residential House or Residence by Foreigner Residing in Indonesia, however, foreigner can own apartment unit (Strata Title/Hak Milik atas Satuan Rumah Susun) provided that the unit is built on land having the status of Right to Use on State-Owned Land. Apartment built on any other land title can not be owned by foreigners. This makes the possibility of foreign ownership of apartment in Indonesia becomes very limited.

Government to Issue New Policy on Foreign Ownership of Apartment

The Indonesian government under President Jokowi plans to issue new policy on property ownership by foreigners in the near future. However, in order to conform to the principle of prohibition of foreign takeover of land in Indonesia, the new policy would focus mainly on foreign ownership of apartment unit and it would not include landed house. The idea behind this government’s plan is to help promoting property sector and foreign investment in Indonesia.

Aside from providing more possibilities on foreign ownership of apartment in Indonesia, the government also plans to apply some conditions in order to anticipate the impact of the new policy which might conversely harm the property sector in Indonesia. Under the new policy, foreigner would only be allowed to own apartment with certain conditions. Such conditions would include the type and area of apartment can be owned by foreigner, the limitation of number of apartment unit can be owned by foreigner, sale price of the apartment unit can be purchased by foreigner and other conditions related to those which may adversely affect the purpose and objective of the government’s plan to promoting property sector in Indonesia

The contents of this article are intended to convey general information only and not to provide legal advice or opinions. If you require legal assistance, you may contact:

 

HADROMI & PARTNERS LAW FIRM
Setiabudi Atrium, 4th Floor, Suite 404 – 405
Jl. H.R. Rasuna Said Kav. 62, Jakarta 12920, Indonesia
Telephone : (62-21) 520 7040 (hunting)
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Email: info@hadromi.com or hadromi@centrin.net.id

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